Rent Cap Faces Legal Challenge Under Civil Code Article 349

Irene Montero and the Rent Decree: The Article 349 Hurdle

For those in the property business, the uncomfortable question isn't how to lower rents, but why plots of land have sat without a 'for sale' sign for a decade. The answer, according to those managing these assets daily, is that withholding land is part of the business. And this is where the tug-of-war that has dominated recent political discourse begins: can a decree bring down housing prices, or will it crash against the law?

Who Withholds Land and Why

Against the diagnosis that limiting rental profits would divert capital to industry or technology, the real estate sector poses a counter-question: if speculation doesn't exist, why are land and assets held back only to be released piecemeal later? The answer from the other side remains the same: prices are set by supply and demand, and what's stifled is precisely the supply, with funds not building and owners holding out.

Some add a third factor through demographics, pointing to the increased demand for housing as the primary cause of rising prices. The figure cited in this regard—millions of new residents in a short time—lacks a source and is presented as a slogan rather than a calculation.

Article 349: Eviction is Not Occupation

The technical obstacle has a number. Article 349 of the Civil Code states that no one can be deprived of their property except by a competent authority, for a justified cause of public utility, and with prior compensation. Translated: evicting a block of flats to lower rents isn't a matter of just walking in. It requires payment and, very likely, a long and costly legal process that the dispossessed party can win.

Banning speculative purchases or expropriating vulture funds garners more sympathy than a simple price cap, even admit the harshest critics of the flagship measure. The problem is that no one puts forward how to do it.

Venezuela and the Ghost of Fixed Prices

The precedent that resurfaces whenever price fixing by law is discussed is Venezuela and its rent interventions. The warning is repeated with simple logic: if the outcome there was what it was, repeating the recipe here shouldn't yield a different result. The rebuttal is that the country has been out of central government for four years and that housing and urban planning are regional and local competencies, not those of the Madrid Executive.

While some debate whether the cap works, others look at the financial calendar. BBVA is set to announce its second dividend of the year after a first half that, according to those who trinc the stock, already surpasses all earnings in 2023. It's a reminder of where the real money lies: not in renting an apartment, but in a bank's balance sheet.

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